Pharma companies & US generics
The volume share of Indian pharma companies in the US generic market has grown to nearly 40% in August despite regulatory woes and pricing pressures. A steady increase in drug approvals and portfolio rationalisation by MNCs resulted in India’s volume share rising by 5% over the last few months, though value is still impacted due to price erosion.
Over the last couple of years, channel consolidation and deep pricing pressure has hit generic companies, leading to biggies like Teva, Mylan and Sandoz recently rationalising their portfolio. This has given ground for Indian companies to increase their hold in the US market and it can continue to rise as the portfolio rationalisation is far from over since new (domestic) companies are still awaiting approvals in base products, according to an analyst from DSP Merrill Lynch India.
AT Kearney partner (healthcare and pharma) Abhishek Malhotra says, “The first stage of growth was based on leveraging India’s high-quality and low-cost manufacturing base, and primarily focused on generic drugs. Given the pressure on pricing, increased competition and higher regulatory scrutiny, many leading Indian companies have embarked on the second leg of the growth journey. This includes moving up the value chain and developing more complex and specialty drugs and acquiring US companies to have manufacturing and R&D assets in the US.”
PwC India leader (pharmaceutical & life sciences) Sujay Shetty says complex generics and speciality products, which are difficult to manufacture, and niche drugs could add value for domestic companies in the near to mid-term as they are more resilient to pricing pressure.